A more favorable regulatory environment for the ecosystem is expected in 2025, regardless of who wins. For Coinbase, elections are the most important influencing factor for all markets. With the US presidential election awaiting in a month, financial markets could be more impacted by the political campaign. This includes bitcoin (BTC) and cryptocurrencies. In fact, According to the Coinbase exchange, this issue will become the main influencing aspect for prices. This is until the result of the elections on November 5 defines who will govern, according to its analysts in a recent report. “We expect the US elections to dominate as the most important factor for all markets, including cryptocurrencies, until November 5,” they maintain. In this way, they suggest that this could counterbalance other situations of recent impact such as the macroeconomic and geopolitical environment. According to Coinbase analysts, this is something that could benefit the ecosystem bitcoin and cryptocurrencies. This is due to the support that the candidates from both parties competing for the presidency are showing to the industry. “Cryptocurrencies have recently attracted supportive rhetoric from both sides, suggesting that the asset class could benefit from a more favorable regulatory environment next year, regardless of who is in the White House,” they commented. Expectations about who will win the elections are disputed. According to bets on the Polymarket platform, 50% expect a victory for the Republican candidate Donald Trump, while 49% expect a victory for the Democrat Kamala Harris. This shows a change in the balance compared to last week, which was just the opposite, as the graph shows.
Betting on who will win the presidential election. Source: Polymarket. Although a Trump victory means a better prospect for the bitcoin ecosystem, since he wants to transform the country into a center for the industry, Harris is not far behind. With a more neutral stance, the Democratic candidate recently expressed her support as long as the security of investors is preserved, as reported by BitcoinDynamic.
The US election campaign impacts the view of bitcoin in China
The bipartisan support for the cryptoasset ecosystem in the US election campaign also carries global implications. Consequently, the Coinbase team highlights that an emerging theme that could be relevant to the market in the fourth quarter of 2024 is China's change of focus towards cryptocurrencies. Recently, China's former vice minister of finance, Zhu Guangyao, suggested that Chinese officials should reevaluate their stance on cryptocurrency policy in light of this American election season. “His comments are significant and could bode well for the asset class,” they say from the exchange. However, the Coinbase team clarifies that Tensions in the Middle East remain a risk for markets in general. The escalation of war this week caused bitcoin to sell sharply in correlation with stocks and gold purchases to grow. This, he distinguishes, “suggests that the current bitcoin trading regime is more in line with 'risk' assets than 'safe haven' ones.” Therefore, it is crucial to monitor how it continues to perform, considering the scenario of greater liquidity due to interest rate cuts. “Looking ahead, we expect the focus on US monetary policy to persist, especially as jobs data still does not provide clear enough directionality for markets,” he adds.
Markets reacted badly to Jerome Powell's messagepresident of the Federal Reserve (Fed), Central Bank of the United States, at the beginning of the week. This showed a more neutral stance for the rate cut, which will have its next definitions on November 7 and December 18. “We believe his comments were designed to align market expectations with a reduction rate of 25 basis points per meeting,” they commented from Coinbase. However, they note that federal funds continue to discount cuts of around 75 basis points for the remainder of 2024. With this, the exchange team considers that the future guidance of monetary policy has become less reliable. In his opinion, this means that its trajectory will depend more on labor data, since if it continues to slow down, the risks of recession will increase. Meanwhile, bitcoin remains within the corrective lateral range that it has been in for seven months when it recorded a new price record. This is unlike other assets such as gold and major US stocks that hit new all-time highs last week, driven by rate cuts in the US and China.